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17 August 2018

Quanergy lidar set back as IPO postponed after Daimler snub

The fall back to earth just experienced by Quanergy, a maker of solid state lidar devices for self-driving, has widely been attributed to its recent absence from the list of partners working with Daimler for an autonomous commuter service in Silicon Valley. It seems this omission has savaged Quanergy’s valuation, ahead of its planned IPO.

This was certainly a set back because Daimler’s biggest brand Mercedes had been Quanergy’s first major customer and partner, starting in 2014 before propelling the company towards an apparently hugely overinflated valuation of $1.5bn. This was followed by the two companies showing a Mercedes E350 sedan outfitted with Quanergy’s lidar devices at the Consumer Electronics Show in Las Vegas in January 2015.

Yet we think Quanergy’s reverse can be traced back over three years to around February 2015 when its co-founder Angus Pacala decided to leave before re-emerging at CEO of another lidar start-up, Ouster, in July that year. This strongly suggests that Pacala had already lost faith in Quanergy’s solid state technology at that early stage, and decided to revert to the traditional approach favored by the pioneer of the field Velodyne, aiming instead to reduce size and speed up the rotation of the scanning unit.

The broader lidar story began in the mid-2000s, when Velodyne invented the 3D lidar scanners that helped get autonomous driving off the starting line. The industry then came around to the idea that the Velodyne approach, of mounting 64 lasers onto a rotating gimbal (pivoted support for rotating object), would be rendered obsolete by a new generation of smaller solid-state lidar sensors using a single stationary laser to scan a scene.

This would avoid mechanical wear and tear, just as solid-state memory drives do, while possibly in this case being cheaper. Amid this strengthening consensus, combined with soaring hype over prospects for lidar as autonomous driving gathered steam, Quanergy was formed in November 2012.

It soon attracted $150mn funding from big names including Delphi Automotive, Samsung and China’s “Amazon” Alibaba, as well as Daimler. It became the first unicorn in the autonomous driving field, by passing a $1bn valuation, but meanwhile sentiment was changing over its technology.

There are now several types of lidar technology, just one being the rotating system with slanted mirrors to direct laser pulses out towards objects so that distances can be calculated by the time between emission and reception of backscattering reflections.

But as part of the drive to reduce size and avoid dependence on mechanical systems, several solid-state designs evolved, along with a hybrid MEMS (microelectromechanical systems) approach that still uses a tiny mirror to steer a laser beam. One type of true solid state lidar use optical phased arrays to steer a laser beam with no moving parts.

A second type is called flash solid state lidar, because it dispenses with beam steering and just illuminates the whole scene like an optical camera at night in a single flash, detecting the returned light with a two-dimensional array of sensors. Quanergy adopted this phased array approach, which had obvious appeal – with no moving parts. But we can only presume that Pacala, and then Daimler, were disappointed with test results.

It may be that they were just teething troubles, and certainly Quanergy appears to be persisting with this approach – making such devices at a factory in Sunnyvale, California, which opened in December 2017. It is still too early to tell whether this will succeed, and there will certainly be more effort devoted to perfecting solid state lidar given the attractions.